The US just announced that it will be moving ahead with import tariffs on aluminum and steel from Canada, Mexico, and the EU. Obviously, these two materials are widely used in the production of new cars and trucks. Specifically, the US will tariff 25% on imported steel and 10% on imported aluminum. To pour on some more information, Canada has just announced a reciprocal tariff on the US. We wonder what the latest US steel and aluminum tariffs mean for the auto industry.
Beginning of a Trade War?
So, it seems there is a trade war budding between the US and some of its closest allies. What does this mean for the economy? CNN reported earlier that a right-leaning think tank, the American Action Forum, estimated that American citizens would end up spending an extra $7.5 Billion as a result of the US tax cuts alone. This number does not take into account the retaliation already made by Canada, nor does it account for potential retaliation from Mexico or the EU, who will also likely retaliate.
Potential Impact on the Auto Industry
At this point, we are already talking about potentially $10+ billion dollars of cost to American citizens, which means a lot of money will be taken out of the auto industry as well. The Council on Foreign Relations did a comprehensive evaluation of these tariffs as they relate to the auto industry. They estimate the price of a new vehicle to go up 0.5-0.8% on average. This price increase, they expect, will result in a total sales decline of 1.6-3.6% in the US. The end result? Auto industry job losses in the range of 18,000 to 40,000 by the end of 2019. These estimations don’t take into account the tariff from Canada, or the upcoming tariffs from Mexico or the EU either.
What are your thoughts on the tariffs as they relate to the auto industry? Let us know what you think in the comments below. (Please try to keep the discussion cordial, and politics free)
Stay tuned to TFLcar.com for more news regarding the aluminum and steel tariffs imposed by the US and how they relate to the auto industry.